Retail sector demands action on predicted job losses

Posted
March 15, 2012 20:45:00

An inquiry for the National Retail Association predicts online competition will lead to tens of thousands of job losses over coming years and there are calls for Federal Government action on the issue.

CHRIS UHLMANN, PRESENTER: The thousands of jobs lost across Australia this year will pale beside what's ahead for retail. The latest research obtained by 7.30 predicts 118,000 jobs will bleed from the sector over three years because of fierce competition from online shopping and 33,000 jobs will vanish because the Federal Government won't close a GST loophole for imported goods bought online.

The findings are the result of a six-month inquiry by accounting giant Ernst & Young commissioned by the National Retail Association.

But as Greg Hoy has found, the claims have triggered a serious rift between major retailers about what action, if any, the Government should take.

GREG HOY, REPORTER: The gloss of the new season sales pitch for Australian retailers is overshadowed by a bitter dispute over the impact for traditional shopfront retailers compelled by law to charge GST on all items sold of online shopping where imported items under $1,000 are granted a GST exemption. An unfair advantage compounded by import duties and the import power of a high Australian dollar that many say is slowly strangling shopfront retail which employs 1.3 million Australians.

GARY BLACK, EXEC. DIR., NATIONAL RETAIL ASSOC.: We'll lose 33,000 jobs over the next few years. The jobs crisis unfolding in retail that dwarfs the predicament and dilemmas that are confronted by the demise of the Australian manufacturing sector.

GREG HOY: Be it wholesalers or retailers great and small, the message is echoing across the retail sector.

ANDREW DALGLIESH, CLOTHING WHOLESALER: Retail is a great stepping stone for so many working people and yet we're killing them. If all of those people were in one company and it went broke, there'd be a national outcry.

PALOMA HATAMI, RETAILER: A lot of my peers have actually closed down. I do know of at least six. It's a long-term issue that we're not looking at because online retail is growing at an exponential - it's exponentially going up and it's like a tsunami.

CATCH OF THE DAY CEO: We've been growing by 100 per cent a year every year for the last five years. We sent something like 50,000 parcels every single week. Every day we send something like six or seven semi-trailers full of goods.

GREG HOY: But research to be released tomorrow by Ernst & Young for the National Retail Association estimates 118,000 jobs will be shed from retail by 2015, 33,000 of those unless the Federal Government closes the GST loophole as other nations have done.

DAVID COCHRANE, ERNST & YOUNG: In developed countries the majority of those countries have low-value tax thresholds that are far lower than Australia and the UK in fact has recently reduced its threshold from 8 to 5.

ANDREW DALGLIESH: I don't get it: why New Zealand have it, Canada has it, Italy has it, Germany has it, UK has it - they all have it. We don't.

GREG HOY: It was the Howard Government that raised the tax-free threshold for imported goods to $1,000, claiming it would cost Customs too much to police piles of incoming parcels purchased online. Then late last year, the Productivity Commission said though it might be costly, there's a strong case for closing the GST gap again. But the Gillard Government has dug in, claiming on current imports a lower threshold of $100 would cost Customs $1.2 billion to police to collect just half a billion dollars in tax - so, too hard. But what about the hidden costs?

GARY BLACK: What the Ernst & Young report shows that the cost to the economy will be a hit of over six billion and we're talking about 33,000 job losses. When you factor that into the numbers, there's an overpowering case for the removal of the threshold.

GREG HOY: It's an increasingly volatile issue for government, which surprisingly has been thrown an unexpected lifeline from the biggest retailer of them all, Woolworths.

GRANT O'BRIEN, CEO, WOOLWORTHS: The thing that we can't afford to do as retailers is be seen to be calling for additional taxes for customers. The issue for us is to be providing for customers exactly what they require in terms of flexibility and options to shop when they want and have the very best use of new technology to assist them in that.

GREG HOY: Woolworths is spending heavily to develop online service platforms for its various businesses, but its unexpected outburst has really seen the fur flying in retail.

GRANT O'BRIEN: I think technology just in our industry at least, the retail industry, will just cause jobs to change. There's no reason why that won't result in similar levels of employment, if not greater levels of employment for the young people of Australia.

GREG HOY: Woolworths have said that retailers should just lower their prices to restore the trust of their customers. Do you think that's fair?

BERNIE BROOKS: Well I think our deflation in the business'd highlight to you that we are lowering our prices consistently to be competitive. From our point of view, I think it's - remember that they don't sell much in the way of general merchandise. They're predominantly a food operation. There's not much food on the Internet.

GRANT O'BRIEN: My comments go equally for our apparel and our general merchandise categories as they do for our food. It's all about making sure that we've got on offer what customers are demanding.

BERNIE BROOKS: It's in their interest to make comment like that because it doesn't necessarily impact their business the way it impacts a lot of small businesses.

GRANT O'BRIEN: I think the online world offers small retailers great opportunity.

GREG HOY: But with new research on job losses, the crossfire is sure to continue with politicians increasingly feeling the heat.

GARY BLACK: We can't have the sustainable online sector in Australia until we level the playing field.

PALOMA HATAMI: We will set up a company in a duty-free country and we will be shipping goods to Australian consumers without taxes and duties, and this is completely legal and legitimate and it's promoted by the Government unfortunately.